The ports of LA and LB have initiated an unforeseen move to try to help weather the storm of terminal congestion. Effective November 1st, the ports will charge carriers an emergency fee, another sign that the supply chain is far from sorting itself out. Below are details and terms of the fee:
- A charge of $100 will be issued once local delivery containers have remained at terminals for more than 9 days.
- Rail containers are only given 3 days before this fee is issued.
- Increments of $100 will be charged each successive day that a container is still at terminal (Day 2 = $200, Day 3 = $300, etc).
Essentially an “excessive dwell” fee, port managers and representatives state that this move is intended to help clear the backlog of anchored vessels, which is currently over 70 vessels per day. Managers further stated that this is to essentially force carriers to pressure their customers to retrieve their shipments in order to free up terminal space and return vessels to berth for more efficient operation. They estimate that around 40% of the containers that land in the LA-LB ports will be subject to this fee. Carriers will also be forced to decide if they will absorb the fees or pass them on to customers, a situation some managers fear will lead to a gridlock due to the severe chassis shortage in the area. This does create a sticky situation, as even if retailers are now more motivated to try their hardest to secure transportation to avoid the fee, if drivers and chassis aren’t available there isn’t much they can do. Freight forwarders expect a strong pushback from ocean carriers.
This proposal was developed by the White House’s Supply Chain Disruptions Task Force, the U.S. Department of Transportation, and a number of supply chain stakeholders. The revenue generated from this fee will be re-invested into the ports to help improve efficiency and address the congestion issue even further. It remains to be seen if this fee will have the intended effect or not.